Travelers Bond & Specialty Insurance

Transcription

1 Travelers Bond & Specialty Insurance Surety Bonds in Action - Insurance Association of the Caribbean IAC Seminar June 1,

2 Presenter Nancy Cruz, Managing Director Construction Services/Bond and Specialty Insurance Travelers Casualty and Surety Company 20+ years of surety bond and reinsurance experience Manage business portfolio in USVI/Puerto Rico International Surety, Strategic initiatives Insurance Institute of America designations ARe, AFSB 2

3 Agenda Introduction to Travelers Bond & Specialty Insurance Surety Products offered Bonded Projects History Surety Bonds in Action Laws and regulation Underwriting process/example Claims Questions 3

4 Travelers Founded in 1853, Travelers brings over 150 years of experience in the insurance business. Executive offices in New York, Hartford, Connecticut and St. Paul, Minnesota. Travelers employs 33,000 employees worldwide, including significant concentrations in core insurance disciplines such as claims, underwriting, actuarial science and Risk Control. Growing Global Presence: In addition to the USA, Travelers has operations in Canada, the United Kingdom, Ireland, globally through its Lloyd s of London platform and in Brazil through JMalucelli Grupo Seguradora. SELECTED HIGHLIGHTS FROM TRAVELERS HISTORY 1897 Issued the world s first automobile policy 1911 Issued our first surety bond 1919 Issued the world s first insurance for aerial transportation 1955 Issued its first homeowners policy 1964 Issued the first U.S. D&O liability policy 1997 Developed the first automated insurance fraud detection system 2006 Introduced the first nationwide discount for hybrid vehicles Confidential Includes Travelers Proprietary Information 4

5 Travelers at a Glance Member of the Fortune 100 and Fortune Global 500 lists of largest companies World's Most Admired Companies, Fortune Magazine, One of only 30 companies included in the Dow Jones Industrial Average index and the only financial services firm. Listed on the New York Stock Exchange (TRV) Strong credit and financial strength ratings: Financial Strength Ratings A.M. Best A++ S&P AA Moody s Aa2 Fitch AA Jay S. Fishman, Travelers Companies Inc., Chairman & CEO Forbes Magazine, February 28 th, 2011 Source: SNL Financial as of August, 2014 Confidential Includes Travelers Proprietary Information 5

6 2014 Financial Results Total Revenues of $27.1 billion Net Income of $3.6 billion Net Investment Income $2.8 billion Total Assets of $103 billion Total Shareholders Equity of $24.8 billion Confidential Includes Travelers Proprietary Information 6

7 2014 Top 10 Surety Writers (Preliminary) The Surety & Fidelity Association of America Top 100 Writers of Surety Bonds United States & Territories, Canada & Aggregate Other Alien Calendar Year 2014 (Preliminary) GROUP/COMPANY Direct Premium Written Market Share Direct Losses Incurred * Direct Loss Ratio Net Premiums Earned Net Losses Incurred 1 TRAVELERS BOND 802,075, % (142,971,486) -18.3% 737,790,640 (163,695,191) -22.2% 2 LIBERTY MUTUAL GROUP 737,586, % 290,985, % 718,866, ,104, % 3 ZURICH INSURANCE GROUP 508,614, % 39,343, % 267,131,234 25,336, % 4 CNA INSURANCE GROUP 418,801, % 24,161, % 408,170,106 31,323, % 5 CHUBB & SON INC GROUP 208,339, % 502, % 276,044,017 52,267, % 6 HARTFORD FIRE & CAS GROUP 176,084, % 63,002, % 157,840,480 53,007, % 7 IFIC SURETY GROUP 169,944, % 24,984, % 136,402,101 15,198, % 8 HCC SURETY GROUP 164,546, % 25,250, % 147,826,870 5,908, % 9 ACE LTD GROUP 161,873, % 11,167, % 95,504,027 (2,828,031) -3.0% 10 GREAT AMERICAN INSURANCE COMPANIES 119,564, % 24,239, % 112,389,984 31,053, % Net Loss Ratio Source: SFAA 7

8 International Bond & Specialty Insurance Canada Travelers Canada Four Branches: Toronto (Head Office), Montreal, Vancouver, Edmonton Puerto Rico & USVI Travelers C&S Co. Based in Fort Lauderdale, FL office Europe Travelers Europe Based in Travelers London office Latin America Joint Venture: 49.9% interest in J. Malucelli Participações em Seguros e Resseguros S.A. J. Malucelli is the market leader in surety in Brazil based on market share Joint venture with J. Malucelli in Brazil acquired a majority interest in Cardinal Compañía de Seguros, a Colombian start-up surety provider. 9

9 Bond & Specialty Insurance History Issued our first two bonds on Oct. 28, 1911 Has participated on major projects such as: The Hoover Dam, Cape Canaveral, The Statue of Liberty Renovations 1931 Hoover Dam 1960 s Cape Canaveral 1980 s Statue of Liberty Renovation Confidential Includes Travelers Proprietary Information 11

10 Bond & Specialty Insurance Today Tappan Zee Bridge Replacement Today LAX Expansion 12 Minnesota Vikings Stadium

11 Surety Bonds in Action Laws and Regulations Federal Miller Act Requires contractors post bonds on public projects < $100K Performance and payment (labor and material) 100% of contract Sureties must be registered (US Department of Treasury) State Little Miller Acts Minimum amount varies by state State Statutes International Contract Law Percentage Bonds Bond Forms References underlying contract Terms of coverage outlined in bond wording 13

12 Surety Bonds in Action Contractor/Surety Relationship Long term relationship vs. transactional Program parameters based on financial analysis Access to surety s tools and resources Engineering Accounting Industry Challenges Construction market downturn Lack of new work Reduced margins Travel outside normal territory Within and outside U.S. Project delivery methods Design/Build Public/Private Partnerships Contract terms and conditions 14

13 Surety Bonds in Action Contractor Underwriting Process Financial Analysis Analysis of work on hand Amount, mix of work Completed Job History Project Underwriting Process Obligee Scope of Work Size of Project Project Location Equipment Subcontractors, Suppliers Joint Venture Partners Contract terms and conditions Warranties Damages Termination Dispute Resolution 15

14 Surety Bonds in Action Project Underwriting Example: $8 million contract for foundation work for new mall Obligee: Large U.S. Mall Builder Location: Caribbean Island Start Date: May, 2012 Completion time: October, 2012 Mall opening date: December 2013 Questions/Issues to consider: Obligee s past history/reputation as owner Site Conditions Soil studies/differing Site Conditions Weather at project location Timeline of this project and impact on other portions of work Damages clause Liquidated/Consequential 16

15 Surety Bonds in Action U.S. Claims Process Role of Obligee/Surety Comply with notice of claim time limits Surety conducts impartial investigation of performance and payment bond claims Pay claimant or deny claim Complete the project Complete with original contractor Relet job to another contractor Pay cost to complete to Obligee 17

16 Questions? 18